Despite having had little special encouragement or incentives, India?s auto industry is today the world?s largest exporter of small cars selling more little cars than Japan and Korea and even China that is twice as large an auto market. But it is the foreign companies like Hyundai and Maruti who are finding it more economical to market smaller models made in India than from other countries. Ford has now followed their example by announcing that it would make India its production base for a new small global car the Fugo.
The reasons are not hard to understand. India has a well developed base of steel and metallurgical industries and very mature vendors of castings, forgings, electricals, brakes and other components. The cost of these raw materials and components constitute over 60% of the value of any car and make an Indian base attractive as also the large pool of good engineers and managers. Equally important is the fact that India has a good domestic market for small cars to offer economic good scales of production. This year India will make about 1.7 million passenger cars of which 75% will be small hatchbacks. Of these 24% will be exports and India will have a domestic market of about 1.3 million cars.
India loves small cars. It?s old love affair with the Maruti 800 may have ended as this old cutie is now old after 25 years and is now a bit of a ?garib? or poor car. The Indian buyer has changed. He no longer wants just a basic cheap car but one that offers all the style and comfort that he feels he must have. Few cars can sell without air-conditioning, power steering, power windows and fancy music systems today.
The market is also very fickle with the life spans of new models getting shorter and shorter as buyers are now offered a bewildering array of some 20 very attractive small models to choose from. Let?s face it, the car is a buyer?s most public private possession and he or she wants a set of wheels commensurate with their status or style. The Indian buyer is today so spoilt for choice that many are confused. They now also have a choice of petrol and diesel engines.
But why is there such a rush for so many new models? When the Santro had done so well why has Hyundai launched the i10 and the bigger i20? When the Alto, Zen, WagonR and Swift already command India?s hatchback market why has Maruti launched the A Star and the bigger Ritz? The answer is that most hatchback buyers are ambitious, young and upwardly mobile people who want change so although the Santro or Swift remain excellent cars capable of many years of trouble-free service, many buyers are now becoming fashion followers and want the funky European styles with taller roof lines, huge popping out headlights and even huger grilles that look like the gaping mouths of a giant fish.
As fashion freaks change their expensive luxury watches, shoes and handbags long before they look shoddy and the same is beginning to happen with cars